The Trenton Times published the following article on May 15, 2013. To read the full article, click here.

State tells Trenton officials to sell Marriott Hotel

By Jenna Pizzi/The Times of Trenton 
on May 15, 2013 at 10:13 PM, updated May 15, 2013 at 10:18 PM

TRENTON — The state Department of Community Affairs said in a letter yesterday that the city should get out of the hotel business and sell its assets in the debt-mired Marriott Hotel, which may be on the brink of closing.

“There was a consensus among all participants that steps need to be taken to make the hotel less of a burden on taxpayers, which would ideally include the sale of the asset,” wrote Thomas Neff, director of the Division of Local Government Services, which is part of the DCA.

The letter came following a meeting on Tuesday between Neff, Mayor Tony Mack and representatives from the Lafayette Yard Community Development Corp., the public board that oversees the hotel, and staff from the Economic Development Authority.

Neff said the DCA and city administration acknowledge that if the hotel were to shut down after June 15, when the current management company and Marriott flag are pulling out of the property, it would make it less likely that the hotel would be sold in the marketplace.

Mack aide Anthony Roberts said yesterday that the administration is in favor of selling the hotel, but it may take some time.

“At some point in time, not now, steps will be taken to lessen the burden on the taxpayers which will lead towards the ultimate sale of the hotel,” Roberts said.

Joyce Kersey, the chairwoman of the hotel board, and Mack have said the hotel would likely shut down if city council does not fund $200,000 in necessary transition costs to covert the hotel from a Marriott to a proposed Wyndham hotel.

“To me, if they don’t fund it the hotel closes,” Kersey said.

Council balked at voting on the spending resolution during its meeting earlier this month, saying it did not have enough information on how the $200,000, and the additional $3 million in estimated transition costs would be funded.

Kersey and Mack have said the $200,000 is already in the city budget as transition expenses for the hotel. A good chunk of that funding, Kersey said, would go toward a reservation system that is required by Marshall Hotels, a Maryland-based management company that the Lafayette board contracted with to take over next month when the current company leaves. The total cost of the reservation system is about $107,000. An additional $49,000 of the immediate transitional costs will cover the expenses to remove and replace signage in the city, board attorney Gregory Johnson said.

Even though city council has yet to approve the $200,000 funding for the board, the board voted last night to purchase the reservation system.

“We need to approve this because it has to be ordered by Friday,” Kersey said. “If they don’t have this by Friday the ball game is over because they can’t take reservations.”
Michael McGrath, was the only board member to vote against the purchase, saying he would rather wait until the board knows that the funds are approved and available.

Kersey said the board is going to go to city council with a more detailed funding plan at a meeting on Tuesday.

The presentation, which will mimic that given to the DCA this week, will highlight the cost of letting the hotel fold.

Johnson said if the hotel closes, its 84 employees would be laid off and the management company would be obligated to pay the employees a one-time payment of $225,000 for one month of salary and benefits. The city, however, would be left with other costs, such as higher insurance premiums, security costs, utility bills and debt service on the building.

Johnson said the city is responsible for $30 million debt associated with the hotel.

The DCA said it is up to the city to approve the $200,000 in transition costs, but the city would need DCA’s okay for the remaining $3 million tab.

The hotel board voted to ask Edward McManimon, bond council for the city and the board, to prepare a resolution for city council to consider during its next meeting that would fund the $3 million in transition costs and renovations to the hotel.

Kersey said while the Marriott brand on the hotel is set to be replaced by Wyndham, the new brand has held off on signing a contract with the hotel until all the transitional funding is secured.

“It is money, money, money,” Kersey said.

Contact Jenna Pizzi at jpizzi@njtimes.com or (609) 989-5717.